Croatian Real Estate Newsletter

Transcription

1 - CREN - Croatian Real Estate Newsletter Volume 34, March 2009 CREN PATRONS TABLE OF CONTENTS 1. THE FIFTH ANNUAL INTERNATIONAL CONFERENCE ON THE REAL ESTATE MARKET IN CROATIA CONFERENCE PROGRAM PRESSCLIPPING MIROSLAV DRAGIČEVIĆ, PH. D., FOUNDER & MANAGING PARTNER, HORWATH CONSULTING ZAGREB Croatian Tourism in Crisis Even without the GlobalCrisis.. 18 ALAN HERJAVEC, HEAD OF PROJECT FINANCE SOCIETE GENERALE SPLITSKA BANKA D.O.O. Moratorium on Housing Loan Repayments Necessary NEWS FROM THE REGION STATISTICS Average Asking Prices of Real Estate Offered for Sale March Statistical Reports of the Central Bureau of Statistics from the Area of Civil Engineering Building permits issued, January Building permits issued, PAST EVENTS DO NOT MISS OUT A N N O U N C E M E N T

2 1. THE FIFTH ANNUAL INTERNATIONAL CONFERENCE ON THE REAL ESTATE MARKET IN CROATIA CREN - Croatian Real Estate Newsletter / March / 30

3 1.1. CONFERENCE PROGRAM March 30 & 31, 2009 The Westin Hotel Zagreb Monday, March 30, WELCOME AND REGISTRATION OF PARTICIPANTS Crystal Ballroom / groundfloor CONFERENCE OPENING Moderator: Marija Noršić Filipović Business Advisory Ltd. KEY NOTE SPEAKERS Vedran Mimica Director Berlage Institute Marko Škreb, Ph. D. Chief Economist Privredna banka Zagreb d.d COFFEE BREAK CREN - Croatian Real Estate Newsletter / March / 30

4 st SET OF LECTURES REAL ESTATE BUSINESS IN TOURISM Topics: Defining the predominating real estate models in tourism; Geographical spread of models and regional examples; Global players in the real estate business; Is the tourism related real estate business desirable in Croatia? Are tourism resorts possible without the real estate? Advantages and disadvantages of existing models applied to our conditions; Recent practices; Key barriers in application of the real estate models; Short and medium term perspective Moderator: Miroslav Dragičević, Ph. D., Founder & Managing Partner Horwath Consulting Zagreb Panel participants: Ivica Čačić, Director Hotel Partner d.o.o. Zagreb Krešimir Lipovšćak, Partner TPA Horwath d.o.o. Otmar Michaeler, CEO Michaeler & Partner & Falkensteiner Group Veljko Ostojić, Director Rivijera Poreč d.o.o. Ivana Šoljan, CEO Jupiter Adria d.o.o COFFEE BREAK CREN - Croatian Real Estate Newsletter / March / 30

5 nd SET OF LECTURES PROJECT PRESENTATIONS WEST GATE INTER IKEA CENTRE Moderator: Natalija Vulić Filipović Business Advisory Ltd. SPEAKERS Denis Čupić Director Redserve d.o.o. Johanna Hult Rentsch Deputy Development Manager Austria, Switzerland & South East Europe Inter IKEA Centre Group PRESENTATION WORLD GREEN BUILDING COUNCIL OF CROATIA Mark Gero, Chairman AmCham Environmental Committee LUNCH OPERA ROOM ArtRoom EXHIBITION AT FIRST GLANCE ALLEGORY OF FACES During the Conference, at 17. floor of the Westin Zagreb Hotel in room Opera, there will be held an exhibition At First Glance Allegory of Faces, at which students of the Academy of Fine Arts in Zagreb will represent their artwork. Filipović Business Advisory Ltd. is the initiator, organizer and sponsor of the Exhibition. We are honored that the Academy of Fine Arts in Zagreb is the patron of the Exhibition. Exhibited work can be bought directly from the students. We are inviting you to visit the Exhibition, to enjoy the artwork of young authors and therefore give them the support in their professional development. CREN - Croatian Real Estate Newsletter / March / 30

6 Lectures are simultaneously held in two conference rooms: 1) Crystal Ballroom / groundfloor 2) Room Panorama / 17. floor rd SET OF LECTURES 1. Crystal Ballroom TOURISM FINANCING TOURISM PROJECTS IN THE PERIOD OF ECONOMIC RECESSION Topics: What was the situation in the tourism real estate market in 2008, and what are the expectations for the future; Is it time to invest in tourism? What are the conditions on the capital markets and after all do they even exist? Are the terms for investing in tourism sector of Croatia competitive considering business environment? To what extent is the governments' role in making investment climate more effective, is the government doing it and how successful? What is the intensity of crisis impacting the tourism sector, and how to get out of the crisis? Investment in the hotel sector in Spain; Investment in the hotel sector in CEE Hotel Development Cost 2009; Guidelines for new hotel projects in Central and Eastern Europe Moderator: Goran Hanžek, Director Club Adriatic d.o.o. Speakers: Jaime Puig de la Bellacasa, Asset Management Eureca inventum Lukas Hochedlinger, Senior Advisor KPMG in Central and Eastern Europe Real Estate, Leisure and Tourism Advisory Services Robert Pende, Director Directorate for Tourism Development Ministry of Tourism Republic of Croatia Franco Peruza, Investor Relations CREN - Croatian Real Estate Newsletter / March / 30

7 Magnum Hotels Charlotte Ruhe, Head of the Office EBRD Croatia Michael Widmann, Managing Director PKF hotelexperts GmbH 2. Room Panorama LEGISLATIVE FRAME FOR SPATIAL PLANNING OF SHOPPING CENTERS Topics: Legislative frame for spatial planning of shopping centers; Procedures for environmental impact appraisals and getting the location permit for shopping centers; Experience in process of planning, designing and getting licenses for commercial and entertainment center Arena centar in Zagreb; Architectural vision of shopping centre development projects Moderator: Goranka Radović, Head of the Sector Ministry of Enviromental Protection, Physical Planning and Construction, Sector for Developments Significant to the Republic of Croatia Speakers: Tamara Stantić Brčić, Head Architect UPI-2M COFFEE BREAK Leo Penović, Project Manager Trigranit Development Corporation th SET OF LECTURES 1. Crystal Ballroom URBAN REVITALIZATION Topics: Reallocation of one-time industrial plants reconstruction of Torpedo hall into the business-trade fair centre; Reallocation derelict parts of the town Rujevica residential development in the non-adequately used part of the town; Enhancing the camping zone into the zone of elite congress tourism district of Preluk City project in function of urban revitalization of Zagreb CREN - Croatian Real Estate Newsletter / March / 30

8 Moderator: Ninoslav Dusper, M. A., Director Urban Planning Institute of Croatia ltd. Speakers: Irena Matković, Head of Office City of Zagreb, Office for the Strategic Planning and Development Srđan Škunca, Head of Department City of Rijeka, Department of Urban Development, Environment and Asset Management 2. Room Panorama PUBLIC PRIVATE PARTNERSHIP LEGAL FRAME Topics: New Law on Public-Private Partnership and Laws on Concessions, Agency for Public-Private Partnership; Regulations on new Law on Public-Private Partnership; Contractual documentation on the old and new Law on Public-Private Partnership Moderator: Speakers: Saša Marenjak, Ph. D., Manager, PPP Knowledge Centre Croatian Institute for Bridge and Structural Engineering Vladimir Skendrović, Ph. D., Manager for Croatia World Bank Kamilo Vrana, Managing Director Agency for Public Private Partnership Branko Vukmir, Ph. D., Advisor COFFEE BREAK CREN - Croatian Real Estate Newsletter / March / 30

9 th SET OF LECTURES 1. Crystal Ballroom LEGISLATIVE FRAME FOR SPATIAL PLANNING OF TOURIST ZONES WITHIN THE PROTECTED COASTAL AREA Topics: Legislative obligations considering tourist zones planning; Regulation distinction for tourist zone planning inside and outside of the urban settlements, and in the mixed settlements zone; Obligations and planning levels from development to procedural spatial plans; Process of making and producing Urban Development Plan/ Detailed Urban Plan for tourist zones; Process of issuing permits and development of Punta Scala tourist zone in Zadar Moderator: Ana Mrak Taritaš, Head of the Office Ministry of Environmental Protection, Physical Planning and Construction, Sector for Spatial Planning Speaker: Željko Predovan Block-projekt d.o.o. 2. Room Panorama PUBLIC PRIVATE PARTNERSHIP PRESENT EXPERIENCES Topics: Structuring and financing Public-Private Partnership projects; Croatian Public-Private Partnership practice experiences Public Sector interest or not? Case Study Handball sports hall in Split Moderator: Speakers: Vladimir Skendrović, Ph. D., Manager for Croatia World Bank Daniel Lenardić, Director, Business Advisory Services KPMG Croatia d.o.o. Saša Marenjak, Ph. D., Manager, PPP Knowledge Centre Croatian Institute for Bridge and Structural Engineering GALA RECEPTION AT THE CROATIAN NATIONAL THEATER CREN - Croatian Real Estate Newsletter / March / 30

10 Tuesday, March 31, WELCOME AND REGISTRATION OF PARTICIPANTS Lectures are simultaneously held in two conference rooms: 1) Crystal Ballroom / groundfloor 2) Room Panorama / 17. floor st SET OF LECTURES 1. Crystal Ballroom CITY OF ZAGREB Topics: City of Zagreb-town integration; Spatial and urban planning system; City of Zagreb urban layout reconstruction for 21st century; City urban consolidation model shown in example of München; Railway line between Donji grad and Trnje Moderator: Slavko Dakić, M. A. Speakers: Višnja Bedenko, Assistant Head of the Office City of Zagreb, Institute for Strategic Planning and Development Jadranka Veselić Bruvo, Head of Department City of Zagreb, Institute for Strategic Planning and Development Aleksander Laslo, Assistant Head of the Office City of Zagreb, Institute for Strategic Planning and Development Academician Professor Velimir Neidhardt, Ph. D. University of Zagreb, the Faculty of Architecture CREN - Croatian Real Estate Newsletter / March / 30

11 2. Room Panorama REAL ESTATE FINANCING Topics: Short introduction on the topic of global and financial environment, with review to CEE region; Global crisis impact on economy and finance sector of the Republic of Croatia; Situation on the real estate finance market in the Republic of Croatia; Changes of the criteria within the banks; Trends of banking sector s assets scope related to real estate financing; The development of banking industry in Republic of Croatia; How did the banks meet the crisis? Will it come to withdrawal of foreign owners assets (capital, deposits, dividends?); What kind of future awaits us? Development in the retail and office landscape in the past 6-12 months; Future trends and consequently the new behaviour of banks and the players Moderator: Natalija Vulić, Head of Shopping and Industrial Filipović Business Advisory Ltd. Speakers: Alan Herjavec, Head of Project Finance Societe Generale Splitska banka d.o.o. Vlaho Kojaković, Development Director TriGranit Development Corporation Jochen W. Seibert, Director RedServe GmbH Mag. Hanna Bomba Wilhelmi, CEO Regioplan Consulting GmbH COFFEE BREAK CREN - Croatian Real Estate Newsletter / March / 30

12 nd SET OF LECTURES 1. Crystal Ballroom HOUSING RESIDENTIAL DEVELOPMENT IN CROATIA Topics: Present situation analysis; Residential development in Croatia in the upcoming years; Special review to the market crisis; Global financial crisis impact on the real estate market in Croatia; Possible recovery measures Moderator: Dubravko Ranilović, Partner, Kastel Nekretnine, Zagreb, President of Real Estate Association at the Croatian Chamber of Commerce Speakers: Danijel Babić, Member of the Management Board Profectus d.o.o. Ivan Stojević, Director PBZ nekretnine d.o.o. Josip Tica, Ph. D. Doc. Department of Macroeconomics and Economic Development, Faculty of Economics & Business at the University of Zagreb 2. Room Panorama ARCHITECTURE CROATIAN CONTEMPORARY ARCHITECTURE EXPERIENCES, REALIZATIONS, PROJECTS Topics: Discussion between reputable and expert architects about architects role in the arising situation of economic crisis and reduced real estate development project activities level; What kind of impact will the economic crisis have on the quality of architectural projects; Comparison to similar periods in Croatian contemporary architecture; The role of the architects in the projects of commercial real estate development: tourism, office buildings, shopping centres, industry etc. CREN - Croatian Real Estate Newsletter / March / 30

13 Moderator: Speakers: Petra Škevin, Member of the Management Board Filipović Business Advisory Ltd. Otto Barić, Director Arhitektura tholos projektiranje d.o.o. Academician Branko Kincl, Professor Civil Engineering Institute of Croatia Saša Randić M. A., Director Randić-Turato d.o.o. Dario Travaš, Managing Director ATP projektiranje Zagreb COFFEE BREAK rd SET OF LECTURES 1. Crystal Ballroom LOGISTIC PARKS Topics: Risk for developers in the process of building logistic parks in Croatia; Agents challenge with brokerage in leasing of the logistic parks; Development of logistic parks market in Croatia for the following 2-3 years; Distributors needs and demands; New concepts of distribution; Changes in the logistic parks' market in the past 5 years Moderator: Speakers: Patrick Franolić, Managing Director Spiller Farmer d.o.o. Željko Čeović, Logistic Manager Oktal Pharma Jovica Mandarić, Operations Director AWT Group Dario Markanovic, General Manager IIG Group Igor Šaravanja, Director Strategy and Organization ALCA Andrew Yeoman, Director Tower 151 Architects Zagreb d.o.o. CREN - Croatian Real Estate Newsletter / March / 30

14 2. Room Panorama OFFICE SPACE CAN THE OFFICE MARKET WITHSTAND THE CRISIS? Topics: Overview of the Zagreb market in a CEE context; Will there be more supply in the coming 2 to 3 years; How do developers plan to finance their projects; Are existing office buildings being affected by the crisis; Is there a specific occupier sector or grade of space (A/B) which is more affected? Moderator: Arn Willems, Partner CB Richard Ellis Speakers: Wolfgang Binter, Project Manager Hypo Alpe-Adria-Immobilien AG Ivana Božičević, Director LS Property Tomislav Gregurić, Director Commercial Services King Sturge Žarko Kovačić, Director Ilirika Nekretnine d.o.o. Erik Mohorović, Managing Director Verdispar Croatia COFFEE BREAK CREN - Croatian Real Estate Newsletter / March / 30

15 th SET OF LECTURES 1. Crystal Ballroom RETAIL HOW TO OVERCOME OBSTACLES OF FURTHER RETAIL MARKET DEVELOPMENT IN CROATIA? Topics: Expansion during the period of global crisis is it at risk? Emerging markets will recover among the first ones is the Croatian market the emerging one? What kind of strategy do the retail companies use to fight the arising situation considering sale techniqes, in the aspect of expansion? What role does the project size has considering interest of tenants, but also interest of consumers is that size really important? The banks initiator or brake for Retail market development in Croatia? Larger cities highstreets still do not lose in value demand still exists! Moderator: Nenad Peris, Manager of Retail Department Colliers International Speaker: Alma Mekić Čerdić, Director Real Estate Financing Erste & Steiermärkische Bank d.d. Nataša Ivana Dorotić, Leasing Director TriGranit Development Corporation Darko Knez, CEO Konzum d.d. Branko Mihajlov, Business Manager Croatia & Slovenia Inter IKEA Centre d.o.o. Leo Mršić, M. A., Director Lantea Grupa d.d. CREN - Croatian Real Estate Newsletter / March / 30

16 2. Room Panorama CROATIAN REAL ESTATE LAW THE ROLE OF THE STATE AND MUNICIPALITIES IN THE REAL ESTATE MARKET Topics: Purchase of state owned properties; Purchase of real estates from municipalities; Forms of use of state owned land; New legal framework for agricultural land; New legal framework for golf courts Moderator: Tomislav Borić, Ph. D. Faculty of Law, Graz Speakers: Melita Veršić-Marušić, LL.M, Attorney at Law Versic Law Office Sanja Porobija, Name Partner Porobija & Porobija Law Firm LUNCH CREN - Croatian Real Estate Newsletter / March / 30

17 CREN - Croatian Real Estate Newsletter / March / 30

18 1.2. PRESSCLIPPING In regard The Fifth Annual International Conference on the Real Estate Market in Croatia, Jutarnji list (No. 3857, Year XI) has published following interviews: Author: Boba Blašković Miroslav Dragičević, Ph. D., Founder & Managing Partner Horwath Consulting Zagreb Croatian Tourism in Crisis Even without the Global Crisis Miroslav Dragičević, manager of Horwath Consulting, the leading consultancy company for investment in tourism, says that Croatian tourism has some trump cards, but it urgently needs to become an all-year round business A great deal is expected from this tourism season, and the forecasts predicting a 30 percent decrease in the number of tourists visiting Croatia are certainly not encouraging. What the tourism season will really be like and how to encourage investments were the topics of our interview with Miroslav Dragičević, manager of Horwath Consulting. CREN - Croatian Real Estate Newsletter / March / 30

19 For start, we asked him to assess the current state of play in the tourism industry? Due to the predominant model of transition and the still existing obstacles, Croatian tourism has not changed the seasonal business model inherited from the socialist period. In order to overcome this, significant investment is needed, with large international players, who would invest in hotels and tourism infrastructure. These are the reasons why hotel businesses are still below the average occupancy levels and average prices in competitive countries. The occupancy rate of hotels is less than 50 percent, and average revenues per room amounting to approximately EUR 19,000 does not satisfy their interests. What should be the orientation of Croatian tourism? Croatian tourism has to be oriented towards providing high quality for its guests, it has to be able to offer more than the sun and the sea, and in order to achieve this, it needs major investment in tourism infrastructure and management and marketing software. Croatia should not opt for mass construction of tourism towns, such as in Turkey or Northern Africa, but it has to be smart in restructuring its inherited assets, and create new quality at existing locations. It has to focus on sophisticated guests from Europe and the world, and it has to offer them a new quality of accommodation, and a stay with content, above all it has to provide an experience. Naturally, this is not easy to achieve, nor is it possible to achieve it quickly, but Croatia has to make this decision now, and start working towards it systematically, in order to catch up with the leading tourism countries, such as Austria, France or Italy. For quite some time, you have been working on a strategic marketing plan for Croatian tourism for the next five years. What are the position and the vision of Croatian tourism? The vision from the marketing plan is to become a strong lifestyle destination for the Mediterranean and Europe, and we still have time to do this, because we still have not used up all our trump cards. In order to achieve this vision, it is necessary quickly to create a smart business environment for tourism, make significant investments in raising the standard of accommodation facilities and create new tourism infrastructure, such as golf courses, theme parks, events, wellness centres etc. All this, parallel to promoting domestic agricultural product brands and typical Croatian food and drinks, would become the cultural trade mark of Croatia as a destination. The sun, the sea and reasonable hotel accommodation are no longer sufficient. New attractions are necessary, one has to be able to offer a new quality of accommodation, new contents and experiences. CREN - Croatian Real Estate Newsletter / March / 30

20 Where are the sources of greatest potential? We have approximately 15 destinations, which can become the basis for building values, which would make all-year tourism possible from Dubrovnik to Umag. These are destinations, which already have the strength for global marketing and distribution. There is no need to re-invent the wheel, but only to establish projects oriented towards supporting this basic vision of all-year tourism within our main tourism clusters of Istria, Kvarner, Dalmatia and Dubrovnik. In order to reduce the investment risks for investors, these projects should certainly involve new business development models and new models of tourism property management. It should be up to the market and investors to decide which tourism products should be developed besides the sun and sea (golf, health, congress etc). The state, on the other hand, has to encourage these new investments through special subsidies. You are the consultant for Brijuni Riviera... This project is at a standstill due to the crisis, but also due to some unresolved obstacles concerning land. It is difficult to say now when construction will begin, but it is certain that this project can be supported by the market, and it will surely come to life some day. What is the role of the local community to what extent are our cities and counties ready for the public-private-partnership model? I have no faith in the public-private-partnership model in tourism. I do not believe that our local communities are yet mature enough to take large steps forward in the tourism industry. The incentives have to come from abroad, but in a transparent way, and the developers/investors have to be able to prove that their projects are in the best interest of the well-being of the local community. I believe that the crisis will discard most projects envisaged by local communities as unrealistic, not thoughtthrough or speculative. I believe that the time of realistic and reasonable thinking about our investments in tourism is yet to come. What would you describe as the crucial problem of Croatian tourism? If you do not allow renowned foreign investors to enter this sector, observing the international rules of the game in this industry, then it is clear what the crucial problem of our tourism is. It is xenophobia and corruption, and everything else follows. If you cannot operate in tourism, as you can for instance in Austria, both in terms of investment procedures and in terms of state support to tourism management and marketing, then these are the reasons why we are still weak and inefficient in the use of our resources. In order to change tourism, Croatia has to change first, and we hope that we are getting closer to these changes to our civilization, as we are progressing in our negotiations with the EU. CREN - Croatian Real Estate Newsletter / March / 30

21 Which countries are our greatest competitors? Actually, when it comes to tourism, one chooses one s competition, because it is up to us to decide the league in which we will play. If we want to become a lifestyle destination with high value for our guests, then our competition is Tuscany, Provence, Côte d Azur, the Amalfi coast and Styria, but certainly not Turkey, Egypt, Tunisia or even Monte Negro. We should use the crisis as an impetus for change In view of the economic crisis, what do you believe this tourism season will be like and when could the market recover? I believe that there is too much talk about the crisis. I believe that Croatian tourism is in a crisis irrespective of the global crisis, because it has been developing randomly over the past 15 years. It is important to realize that the market will recover, but it will never be the same. Today, people travel for the product and the experience, and this can only be achieved through hard work and creativity in the tourism industry. If this is what you are relying on, then it is easier to manage the crisis. However, if you are relying on three months of sun and sea without your own direct marketing and without important alliances with global distribution, then you are very dependant on luck. And this is precisely where we are now. So, it can only be luck or a set of circumstances that can save us to some extent this year, and I anticipate about a 15 percent drop in revenues. However, we should use the crisis as an incentive to change our tourism business model, as soon as possible. As far as you know, how many projects are currently on hold due to the economic crisis? At least 50 large and more than a 100 small projects are currently on hold. The potential of these projects is much larger if one considers the changes necessary in our tourism industry. It is, therefore, time for Croatia to think thoroughly about how to encourage smart and high-value oriented investments in tourism. This is no longer just an issue of tourism; it is an issue of the response of this country to questions of economic growth in the years to come. Croatia has to decide whether it wants a strong tourism industry supported by global management, technological and marketing standards, or if it wants to go on utilizing its natural resources in a cheap way. CREN - Croatian Real Estate Newsletter / March / 30

22 Author: Boba Blašković Alan Herjavec, Head of Project Finance Societe Generale Splitska banka d.o.o. Moratorium on Housing Loan Repayments Necessary The financial crisis has affected all property segments, and the topic of our interview with Alan Herjavec, head of Project Financing Department at Splitska banka, was the impact of the crisis on the financing sector. Without much ado, we asked him the question that has been a source of concern for most of our readers. Will there be a rise in interest rates on loans? In the short term, I do not expect interest rates on housing loans to rise. However, should the crisis continue, it is possible that interest rates will rise on the financial market by a maximum of 1 percentage point by the end of the year. What is the most favourable credit model in Croatia? The most favourable model for housing loans is the one that involves the use of several bank products, connected to reduced interest rates and fees, or purchase of apartments, being built through projects financed by the bank. Citizens claim that the banks have introduced stricter conditions for obtaining loans, so that currently it is much harder to obtain a loan than it was a year ago. Which conditions have been made stricter? The conditions for awarding loans to citizens, who are buying residential premises, have changed due to the increase in the currency exchange rates of the CHF and EURO, and due to changes in calculating credit worthiness, resulting from amendments of the Enforcement Act, higher interest rates and abolishing loans indexed to the CHF. CREN - Croatian Real Estate Newsletter / March / 30

23 Investors also claim that the banks have introduced stricter conditions for approving loans. Both in Croatia and in the developed financial markets, the banks have significantly raised the criteria for granting loans to developers and investors. The share of investors self-financing of the total costs of the investment has increased from 10-30%, to 30-40%. Today, banks can no longer assume the risk of financing speculative projects, and they demand that a certain percentage of flats is sold, or leased, before taking a loan. Are such stricter conditions an obstacle to implementing quality projects? No, stricter conditions are a way for the banks to adapt their business operations to conditions of enhanced risk, and they do not pose an obstacle to implementing quality projects. The problem is, however, that a certain number of banks are no longer in a position to finance projects, even good-quality projects by renowned investors. Societe Generale - Splitska banka is one of the exceptions in this respect, it is a bank that is still able to finance new projects, due to its reasonable business policies in the past, and its affiliation with a strong and healthy banking group. How can the banks mitigate the crisis? The most important thing is to continue providing loans to citizens who are buying apartments. Also, it is important for banks to continue financing new, good quality projects, which will provide new liquidity and preserve jobs in the construction business. The property industry is a cyclical business, and both a standstill in credit activity and an excessive supply of credit contribute to its cyclical character. If all new projects were brought to a standstill, we could face a shortage of apartments in Zagreb in a year. For the banks, this is a time to be patient and calm. This is not a time for dramatic moves and calls for apartment sell-off. What should the government do? The government should prevent an escalation of the crisis in the economy, and prevent an increase of unemployment, and a reduction in real salaries. If the number of unemployed persons should increase significantly, or if real salaries decrease, the state could provide guarantees for a moratorium on housing loan repayments, and thus extend the repayment period for those clients who are faced with difficulties due to losing their job or a reduction in salary. In order to resolve the housing issue for some categories of citizens, the government should also use the situation, in which investors would be willing to relinquish their profit in favour of achieving better liquidity and security. Nobody should expect the state to have additional expenses, but it could contribute by providing guarantees for a certain part of the housing loan, which would make it possible to buy apartments without own participation by the buyers, and thus encourage the sale of apartments. This model could be an additional argument for the government in its negotiations with the trade unions, and it could increase budgetary revenues from the VAT on apartments sold. CREN - Croatian Real Estate Newsletter / March / 30

24 1.3 NEWS FROM THE REGION Izvor: Back to basics: MIPIM Summit 2009 gathers top industry wise men Following in the footsteps of last year s highly acclaimed summit, Real Estate Publishers (REP) and MIPIM jointly organized the invitation-only MIPIM Summit With global real estate transactions down 60% in 2008, the select panel of leading international asset managers and institutional investors examined the current impact of the global downturn and offered their insight into what we can expect in the future. Fashion House Development plans the first ever Russian outlet center (RU) FASHION HOUSE Development, successor of The Outlet Company, and a partnership of GVA Grimley Outlet Services and Liebrecht & Wood, have completed the acquisition of their first Outlet plot in Russia. Sedes Holding A.S invests in prime Istanbul office space (TR) One of the first real office investment transactions has just been realized in Istanbul. The deal consists of five office floors in Yapi Kredi Plaza, located in Istanbul's CBD. Sedes Holding A.S. has purchased five floors from Yapi Kredi Koray REIT in Yapi Kredi Plaza C Block, one of Istanbul's most well-known office towers. CREN - Croatian Real Estate Newsletter / March / 30

25 Hochtief Development introduces new residential project at Kavčí Hory (CZ) On an area of 30,000 m², between the recently completed office building of Kavčí Hory Office Park and the Central Park at Pankrác, four residential buildings with 334 flats and four non-residential spaces will be built. The residential complex, designed by a renowned architectural office Aulík Fi'er Architekti, will be built within walking distance from city public transport ProLogis signs two lease agreements in Slovakia (SK) ProLogis (NYSE: PLD) announces that it has signed new lease agreements for approximately 8,000 m² of warehouse space in building 5 in ProLogis Park Bratislava, Slovakia. ProLogis Park Bratislava comprises six buildings totaling 182,600 m² of warehouse space. Multi Development and Tesco open Forum Liberec in Czech Republic (CZ/NL) On February 26, 2009 Forum Liberec in the Czech Republic opened to the public. The first phase comprises a modern 10,000-m² Tesco MY Liberec department store and 60 other shops as well as 2,800 m² of A-class offices and 14 rental apartments. The planned 350 parking places in the newly refurbished garage were supplemented with an extra 500 places on the roof of the Forum. CREN - Croatian Real Estate Newsletter / March / 30

26 REDEVCO Turkey to complete its first two shopping center projects in Q (TR) REDEVCO Turkey is getting ready for the opening of its first two shopping center developments in the third quarter of Gordion Shopping Center in Ankara will open its doors at the end of August, and Erzurum Shopping Center in Erzurum is to open at the end of September. 2. STATISTICS 2.1. Average Asking Prices of Real Estate Offered for Sale March 2009 average price EUR/m² price range EUR/m² ZAGREB Housing Apartments Houses Commercial space Offices Business premises Office blocks COAST Housing Apartments Houses Commercial space Tourist facilities Average is calculated on the basis of the currently quoted prices on the Burza nekretnina d.o.o. (Real Estate Stock Market ltd.), which is available online: CREN - Croatian Real Estate Newsletter / March / 30

27 2.2. Statistical Reports of the Central Bureau of Statistics from the Area of Civil Engineering Building permits issued, January 2009 In January 2009, there were 862 building permits issued, which was by 96.8% more than in January In January 2009: - by type of constructions, 86.5% out of the total number of permits were issued on buildings and 13.5% on civil engineering works; - by type of construction works, 81.0% of permits were issued on new constructions and 19.0% on reconstructions. According to permits issued in January 2009, it was expected for dwellings with the average floor area of 90.6 m 2 to be built. Advice: Building permits issued, January 2009, Central bureau of statistics, Zagreb, Building permits issued, 2008 There were building permits issued in 2008, which was by 4.1% less than in The expected value of works for the building permits issued in 2008 amounted to thousand kuna, which was by 23.5% more than in According to the permits issued in 2008, there were dwellings planned to be built, which was by 1.2% less than in In 2008: - by type of construction, 88.7% out of the total number of permits were issued on buildings, and 11.3% on civil engineering works - by type of works, 79.0% of permits were issued on new constructions and 21.0% on reconstructions. Notice: Building permits issued, 2008, Central Bureau of Statistics, Zagreb, CREN - Croatian Real Estate Newsletter / March / 30

28 3. PAST EVENTS Date Name Location Web February 05, 2009 CEE Retail Real Estate Awards Gala Warsaw, Poland February 24-25, 2009 CEE Investment 2009 Bucharest, Romania February 26-27, 2009 CEE Real Estate 2009 Prague, Czech Republic March 03, 2009 The Real Estate Market in Southeastern Europe Belgrade, Serbia March 10-13, 2009 MIPIM Cannes, France 4. DO NOT MISS OUT Date Name Location Web March 30-31, 2009 The Fifth Annual International Conference on the Real Estate Market in Croatia Zagreb, Croatia March 31, 2009 CEE Marketing Strategies Bucharest, Romania April Energy Use Optimisation in Buildings Warsaw, Poland April 08-10, 2009 Mall Expo Moscow, Russia April 14-15, th International Conference "Retailtainment in Ukraine" Kiev, Ukraine CREN - Croatian Real Estate Newsletter / March / 30

29 April 23, 2009 SEE Real Estate Awards Gala Bucharest, Romania May 07, th Shopping Center- Symposium Vienna, Austria May 12, 2009 Transport Logistic Munich, Germany May 13-14, 2009 International "ELITE ESTATE" Conference Saint-Petersburg, Russia May 14-17, 2009 INTERNATIONAL REAL ESTATE FORUM "INFOREAL" Saint-Petersburg, Russia May 27, 2009 Russia CIS Premier Real Estate Awards Ceremony Vienna, Austria June 09-12, 2009 EIRE Expo Milan, Italy June 22-24, 2009 REBEC Conference Belgrade, Serbia CREN - Croatian Real Estate Newsletter / March / 30

30 PUBLISHER: Filipović Business Advisory Ltd. Trg bana Josipa Jelačića 3/V Zagreb Croatia Tel: Fax: cren@filipovic-advisory.com It is our wish that the Croatian Real Estate Newsletter / CREN be a source of speedy and quality information for all who are active in the real estate sector developers, planners, contractors, mediation agencies etc. Please send your comments, proposals and opinions to cren@filipovic-advisory.com to help us improve CREN and make it the leading medium on the Croatian real estate market. Editorial staff: Vladimir Filipović editor-in-chief, Lana Maria Milić, Marija Noršić, Petra Škevin and Natalija Vulić. CREN - Croatian Real Estate Newsletter / March / 30